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We have reported in past articles on the tax treatment of foreign corporations which have their principal place of management in Germany. In general, these corporations are treated as subject to German corporation tax on their worldwide incomes provided they are comparable in structure to German corporations (see articles nos. 40 and 94). Thus, for tax purposes the separate legal identity of such entities is respected, even though for civil law purposes it is ignored.

The tax authorities regularly issue lists matching foreign business associations with their German equivalents (in the opinion of the tax authorities).

A new such list was recently issued by the Koblenz Regional Tax Office (admin. order of 8 August 1997 - RIW 1997, 1066). The document also restates the basic principles of the tax treatment of foreign corporations managed from Germany.

Significantly, the U.S. limited liability company (LLC) is still not contained in the list, indicating that the tax authorities have not yet decided how they wish to treat this relatively new and popular form of business association.

Disclaimer and Copyright

This article treats the subjects covered in condensed form. It is intended to provide a general guide to the subject matter and should not be relied on as a basis for business decisions. Specialist advice must be sought with respect to your individual circumstances. We in particular insist that the tax law and other sources on which the article is based be consulted in the original, whether or not such sources are named in the article. Please note as well that later versions of this article or other articles on related topics may have since appeared on this database or elsewhere and should also be searched for and consulted. While our articles are carefully reviewed, we can accept no responsibility in the event of any inaccuracy or omission. Please note the date of each article and that subsequent related developments are not necessarily reported on in later articles. Any claims nevertheless raised on the basis of this article are subject to German substantive law and, to the extent permissible thereunder, to the exclusive jurisdiction of the courts in Frankfurt am Main, Germany. This article is the intellectual property of KPMG Deutsche Treuhand-Gesellschaft AG (KPMG Germany). Distribution to third persons is prohibited without our express written consent in advance.